Editorial: Increase in petrol tax unjustified

Opinion

Increased tax should never be accepted uncritically, especially when the stated purpose is enticing. The Government has decided to go ahead with its intended increase in petrol tax of 5c a litre from April 1, promising the proceeds will be pumped into improvements to roads. Few would argue with the need to step up roading projects to keep pace with rising road use. And those who would argue with that purpose on environmental grounds are nevertheless keen to increase the cost of petrol, hoping to discourage its use. But before we meekly surrender another 5c a litre at the petrol pumps for even an enticing purpose we ought to ask whether the money could be found from existing revenue.

And when it comes to revenue from petrol tax, that is a particularly easy question to answer. The Government already takes 55.4c tax on every litre of petrol, of which only 37.4c is spent on roading and public transport. The other 18c disappears into other expenses of the state. Some of those expenses can be attributable to road use - the cost of health treatment for accidents for example - but many other activities in life place particular demands on public services and not all are saddled with a selective tax. In fact, apart from motor fuel only alcohol and tobacco face a dedicated tax and the last two taxes have an openly punitive purpose. They are considered social evils and the tax is intended to convey official disapproval if it does not succeed in discouraging their use.

If the Government's purpose in raising the petrol tax is also punitive, it should say so and we could argue with the tax on that basis. Since it does not, preferring to justify the increase as a means of advancing the national roading programme, we are entitled to ask why the extra 5c a litre could not be found for roading projects from the 18c diverted to the consolidated fund? Indeed, why is not the entire 18c being put into the transport infrastructure? The list of projects nominated to benefit from the extra $2.04 billion to be creamed from petrol over the next 10 years does not by any means amount to all the work that needs to be done.

And why, if the tax increase was truly a roading investment, does it not contain an expiry date? If it is really being raised to pay for a particular list of projects, let it be removed when they are done. But of course, it will not be removed then or ever under governments of conventional instinct. Revenue, to them, can never be reduced. They quickly find a purpose for a surplus.

For the same reason they are reluctant to use all the revenue they take from a particular source for reinvestment in that sector. If they ever agreed to put the entire petrol tax back into roads, it would become harder for them to ever use any tax from that source for other purposes. They would lose a little fiscal discretion and the national roading fund would take on a life of its own, as it should.

In principle, road users should not pay for the amenity through the tax system but rather pay as they use it, just as they do for food, shelter, health services and most other necessities of life. And just as suppliers of food, housing and healthcare charge a rate that reflects the cost of maintaining their service, so would the providers of roads. Such a charge would also make people think twice about using motor vehicles for some trips and road demand might not continue to grow at the rate of recent years.

But if we must pay for roads through the tax system, the tax-gatherers should ensure that it works as a road use price as far as possible. If they quietly believe it will make people evaluate their car travel more critically, they ought to honour their side of the transaction and treat the tax as capital for reinvestment in roads. Then it would be hard to quibble with an increase for additional projects. But when a considerable portion is siphoned for other purposes, an increase cannot be justified. From April 1, All Fools' Day, we will be 5c a litre poorer.